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United States v. Groos

December 16, 2008

UNITED STATES OF AMERICA
v.
NICHOLAS D. GROOS



The opinion of the court was delivered by: Judge Joan B. Gottschall

MEMORANDUM OPINION AND ORDER

On December 10, 2008, the court held a sentencing hearing for defendant, Nicholas D. Groos ("Groos"). Groos was sentenced to a term of imprisonment of sixty days to be followed by a one-year term of supervised release, as well as a $249,600 fine, which includes all costs of incarceration and supervised release, and a $400 special assessment. The reasons for this sentence were stated in open court and are fully set forth herein.

I. BACKGROUND*fn1

Groos was the president of Luxembourg-based Viking S.A. Viking S.A. is the international division of The Viking Corporation, a United States company based in Hastings, Michigan that distributes fire suppression equipment ("Viking U.S."). In December 2001, Viking S.A. had at least one outstanding order for fire sprinkler equipment from an Iranian company with which it had been doing business for some years. On or around December 11, 2001, Groos learned from colleagues that shipping the ordered goods to Iran without a license was illegal because of a U.S. trade embargo. Nevertheless, Groos and his colleagues took steps to complete the order, valued at approximately $25,000, for their Iranian customer. This was accomplished by shipping the goods from the Viking U.S. Michigan warehouse, using an Illinois-based freight forwarding company, to an intermediary in the United Arab Emirates ("UAE") who would forward the goods to Iran. Groos made the decision even though he knew that the ultimate destination of the goods was Iran, that pursuant to the embargo a license was required for such an export, and that a competitor of Viking's had been caught conducting a similar business transaction to Iran and fined $10,000 by the U.S. Department of Commerce.

The order was shipped to the UAE, in two parts, on or around January 4, 2002 and February 13, 2002, according to the shipper's export declarations. One part successfully arrived in Dubai, UAE. The second was intercepted by the U.S. Immigration and Customs Enforcement after notification by the freight forwarding company that had been alerted to the actual final destination of the shipment. Neither Viking U.S. nor Viking S.A. had the required authorization from the U.S. government to export goods from the United States to Iran.

As a result of the embargo violation, the U.S. Department of Commerce fined both Viking U.S. and Viking S.A. The government filed a criminal complaint against Groos on June 7, 2006, more than four years after the transaction occurred. Groos was arrested the next day. On May 3, 2007, a grand jury returned an indictment charging Groos on four counts relating to the January 4, 2002 and February 13, 2002 shipments. The charges were brought under the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-06 ("IEEPA"), the Iranian Transactions Regulations, 31 C.F.R. § 560 ("ITR"), and the Export Administration Regulations, 31 C.F.R. § 730-74 ("EAR"), which were promulgated pursuant to the Export Administration Act, 50 U.S.C. app. §§ 2401-20 ("EAA").

Groos filed four pretrial motions. On June 13, 2008, the court granted the motion to strike surplusage (specifically paragraphs 2 through 10 of Count 1, also incorporated into the other three Counts), and denied the motion to dismiss insufficient indictment, the motion to dismiss Counts 2 and 4, and the motion for depositions of foreign witnesses. On August 7, 2008, Groos entered a blind plea of guilty as to all counts of the indictment and the court entered a finding of guilty. A Presentence Investigation Report ("PSR") was prepared and the government and Groos submitted sentencing memoranda. Sentencing was held on December 10, 2008. At the hearing, the government and defense counsel submitted argument, focusing on comparable cases and sentences pursuant to the court's request, and Groos orally supplemented his written submission to the court. The court sentenced Groos in open court and sets forth its reasons more fully below.

II. SENTENCING PROCEDURE

"In sentencing a defendant, the district court is obliged first to calculate the correct advisory guidelines range and then to decide whether to impose a sentence within the range or outside of it." United States v. Miranda, 505 F.3d 785, 791 (7th Cir. 2007) (citing United States v. Robinson, 435 F.3d 699, 700-01 (7th Cir. 2006)). The first step requires calculation of the applicable guidelines. Gall v. United States, ___ U.S. ___, ___, 128 S.Ct. 586, 596 (2007); Miranda, 505 F.3d at 791. However, "the [g]uidelines are not mandatory and thus the [district court's] range of choice dictated by the facts of the case is significantly broadened." Gall, ___ U.S. at ___, 128 S.Ct. at 602. The second step in sentencing requires an application of the factors set forth in 18 U.S.C. § 3553(a), which remains mandatory even though the guidelines are treated as advisory. Miranda, 505 F.3d at 791 (citing United States v. Booker, 543 U.S. 220, 261-63 (2005)).

Typically, a court considers the PSR and its interpretation of the guidelines and then hears arguments by prosecution and defense as to whether a guideline sentence is appropriate.

Id. (citing Rita v. United States, ___ U.S. ___, ___, 127 S.Ct. 2456, 2459 (2007)). The court then determines whether to impose a sentence at, above, or below the guideline range, keeping in mind that "[a] sentencing court should not consider itself constrained by the guidelines to the extent that there are sound, case-specific reasons for deviating from them." Gall, ___ U.S. at ___, 128 S.Ct. at 598. Where the evidence presented indicates that the case falls outside the "heartland" of the intended guidelines, or where the guideline fails to properly reflect the § 3553(a) considerations, or where the case warrants a different sentence, the court may impose a sentence below the guideline range. See Rita, ___ U.S. at ___, 127 S.Ct. at 2465 (discussing the importance of subjecting the defendant's sentence to adversarial testing by the district court). Nevertheless, despite the advisory nature of the guidelines, the Seventh Circuit has cautioned that the sentencing judge "must give respectful consideration to the judgment embodied in the guidelines range that [s]he computes." U.S. v. Higdon, 531 F.3d 561, 562 (7th Cir. 2008).

III. ADVISORY GUIDELINES RANGE

The counts of conviction for Groos are not listed in the Statutory Index of the guidelines manual; therefore, the court must apply the most analogous offense guideline. U.S.S.G. § 2X5.1. The parties agree that § 2M5.1 applies because it concerns evasion of export controls and financial transactions with countries supporting international terrorism. Section 2M5.1 provides:

(a) Base Offense Level (Apply the greater):

(1) 26, if (A) national security controls or controls relating to the proliferation of nuclear, biological, or chemical weapons or materials were evaded; or (B) the offense involved a financial transaction ...


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